SEI Investments Gains on Q3 Earnings Beat, Revenues Up
Shares of SEI Investments Co. (SEIC) rose 2.1% following its third-quarter 2014 earnings release before the opening bell. Earnings of 49 cents per share came ahead of the Zacks Consensus Estimate of 46 cents. Moreover, this was up 40% year over year. A one-time tax benefit was excluded from the prior-year earnings per share.
Strong revenue growth emerged as the primary reason for better-than-expected results. However, rising expenses dampened it to some extent. Further, an enhanced asset position and steady capital deployment activities acted as tailwinds.
Net income attributable to common shareholders came in at $84.0 million, up 25% from the prior-year quarter.
Behind the Headlines
Revenues at SEI Investments grew 15% year over year to $322.0 million. The rise was primarily attributable to higher asset management, administration and distribution fees as well as elevated cash flows. Also, the figure surpassed the Zacks Consensus Estimate of $318.0 million.
Total expenses stood at $231.5 million, up 6% from the prior-year quarter. The increase was mainly due to a rise in most of the expense components, partially offset by a decline in brokerage commissions, stock-based compensation and depreciation costs.
Operating income surged 46% year over year to $90.5 million.
As of Sep 30, 2014, assets under management (AUM.TO) rose 14% year over year to $249.1 billion. Total client AUM was recorded at $363.1 billion, up 17% year over year.
Share Repurchases
In the reported quarter, SEI Investments bought back 2.0 million shares of its common stock for $75.2 million.
Our Take
Overall, SEI Investments has been witnessing a rising trend in revenues for the past several quarters. Moreover, robust asset inflows would prove accretive to the company’s overall growth in the coming quarters. Enhanced Steady capital deployment activities remain impressive too.
However, high dependence on fee-based revenues, a sluggish economic recovery, mounting expenses and stringent regulatory landscape will likely continue to dent the investment manager’s profitability in the upcoming quarters.
Currently, SEI Investments has a Zacks Rank #4 (Sell).
Among other investment managers, Ameriprise Financial, Inc. (AMP) and Waddell & Reed Financial, Inc. (WDR) are slated to announce results on Oct 28, while Invesco Ltd. (IVZ) is scheduled to report on Oct 30.
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